Joint exploration with China will be complying with the 1987 Constituion - Cayetano

Joint exploration with China will be complying with the 1987 Constituion - Cayetano

First the Bad news – Malampaya oil field is projected to be depleted or run out by 2024.

Good news – there is Reed bank that shows a lot of potential that can replace Malampaya when it dries up.

Department of Foreign Affairs Peter Alan Cayetano said that the Philippine government will not directly invest in oil and gas exploration amid the buzz about the joint venture with China in the West Philippine Sea (WPS).

The Malampaya gas field or the Malampaya-Camago field is a deepwater gas-condensate reservoir, located in the Service Contract 38 license area, located offshore, 65 km northwest of the island of Palawan, Philippines- Wikipedia (photo credit to owner)

Cayetano has assured the government’s critics , including outspoken acting Chief Justice Antonio Carpio and Magdalo Partylist Representative Gary Alejano, that any framework on the joint venture with the Asian giant will completely comply with the 1987 Constitution.

Under Section 2, Article XII of the Constitution, the state may enter into "co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens."

"We cannot come up with any agreement that is unconstitutional. That is just not, cannot be done," Cayetano said.

Carpio earlier said that the government must make sure the country’s sovereignity will not be compromised in the proposed 60-40 scheme with China.

“As long as the joint development complies with the Philippine Constitution and there is no waiver of our sovereign rights under the arbitral ruling, I have no objection,” Carpio said.

Cayetano was asked how much will the Philippine government will pay for the joint development in the WPS, the country’s top diplomat said the project would only be among private entities.

"It will be a commercial venture. I think that's a smarter thing to do but as I've said these are preliminary talks but we don't, as of now there's no plans on the Philippine government side," Cayetano said in a press briefing.

Cayetano explains that the government is building upon existing contracts, the country is seeking a same or better agreement than the Malampaya project.

There is an urgency for all parties to come up with a framework for joint development with Beijing prior to the depletion of the Malampaya oil field, which currently supplies power to the majority of Luzon.

"For us, since it's an urgent need, and it will benefit all Filipinos, I wanna work double time on it and I'm hoping our side of the working group can do a lot this August and then try to hit September or October," the DFA Sec. said.

He further explains that the joint project a challenge in terms of public acceptability and as well as the scrutiny of the Supreme Court in terms of it being within the allowed parameters set forth in the 1987 Constitution.

"The challenge is for us to be able to draft a framework or an agreement that the Supreme Court will have an easy time saying it’s constitutional," Cayetano said.

As per the 1987 Constitution, natural resources such as oil and gas in the West Philippine Sea , are owned by the State.

"The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources," the  1987 Constitution read.

The Congress should be informed of any agreement the President made in accordance with this provision within 30 days from execution.

Under Republic Act (RA) 7042 or the Foreign Investment Act (FIA) of 1991, foreign equities may invest up to 40 percent on the exploitation of natural resources and utilization of land ownership.

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